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The latest rise in corporate insolvency as reported by the Insolvency Service has reaffirmed that it is vital for businesses to be cautious when offering credit to firms. Hilton-Baird Collection Services’ most recent Late Payment Survey, which questioned almost 250 business owners and The survey also found that businesses had to wait an average of 17 days beyond their agreed credit terms to be paid in that period. A result of this is that 32% of businesses now classify more than 10% of their debtor book as bad debt. Unfortunately, late payment has also had a knock-on effect down the supply chain which only exacerbates this problem. More than half of businesses admitted to paying their suppliers later (59%) as a result of their customers paying invoices late. Meanwhile 34% said that the single most common reason for late payment was that they are waiting to be paid by their own customers. However, for 13% of respondents the most comment reason for late payment was that their customer simply couldn’t afford to pay. This provides the biggest cause for concern as the financial health of SMEs continues to be under increasing pressure. Alex Hilton-Baird, managing director of Hilton-Baird Collection Services, commented: “The findings of our survey highlight just why it is so important for businesses to do all they can to ensure that they have run the necessary checks on their customers before agreeing to supply goods or services on credit. Our experience has found that corporate insolvency is a persistent problem which historically escalates until long after a recession. Worryingly, we’re seeing that it’s a trend which is likely to continue for the foreseeable future. “It is our hope that businesses really look to safeguard their cashflows against the trend of late payment in the coming months by taking all the vital precautions. Then, in the eventuality that late payment does occur, businesses have all the resources at their disposal to ease the knock-on effect businesses so commonly experience.” Other Business Money News
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